Subprime auto loans won't work out any better than subprime home loans

One of the lessons of the 2008 housing meltdown was that when Washington plays politics with consumer loans, bad things can happen. Claiming mortgage-lending practices created a "disparate impact" on minority home ownership, federal law foolishly pressured banks to lend to high-risk customers. The disparate impact zealots are back. This time they're targeting the auto market. The Consumer Financial Protection Bureau — created under the Dodd-Frank Act to police bad lending practices — seems intent on subjecting auto lenders to failed regulations of the past. Dealers typically distribute a customer's credit application to several lenders, who then compete for the business, keeping interest rates low. But the CFPB wants to impose a flat rate to prevent its phantom "disparate impact" on minorities. The CFPB action would force auto lenders "into changing the way they compensate dealers without any indication that the bureau has examined the effect this change could have on the cost of credit for consumers," says the National Automobile Dealers Association and National Association of Minority Automobile Dealers.Source: The Detroit News

Fears that China will overtake the U.S. in the race to put electric vehicles on the road have fizzled. Despite choking pollution in big Chinese cities, consumers here see EVs as too expensive or too difficult to recharge. China has offered tax incentives on electric vehicles, total sales of hybrid and electric vehicles last year were 12,791, according to the Chinese Association of Automobile Manufacturers. In the U.S. in 2012, automakers sold 53,172 plug-in electric vehicles and 434,498 hybrids, representing a total market share of 3.4%, according to HybridCars.com. “I think everyone would say it hasn't really taken root yet,” GM China President Bob Socia said last month near the Shanghai auto show. “Objectives are worthy, but progress is slow.”Source: Detroit Free Press

General Motors Co., profitable for 13 consecutive quarters, is planning to invest about $16 billion on U.S. factories and facilities through 2016, more than it will spend in China, the company said. “The $11 billion in capital that will be spent in China by 2016 is coming out of our joint ventures rather than Detroit and is far less than the approximately $16 billion in capital GM will invest in the U.S. over that time,” Selim Bingol, GM vice president of public policy, said in a letter published in the Wall Street Journal. Source: Bloomberg

Chrysler Group LLC, moving past costly rollouts of new Ram pickups and Jeep sport-utility vehicles, said production rebounded in April for the No. 3 U.S. automaker's first monthly increase since November. Chrysler's North American output rose 13 percent to 216,758 cars, SUVs and trucks, from 192,491 a year earlier, the Auburn Hills, Michigan-based company said on its website. Production in April was the highest since Fiat SpA-controlled Chrysler built 220,101 vehicles in August. Source: Bloomberg

Tarik Daoud, a former new-car dealer, is a strong believer in the value of education. “I've always maintained that education leads to freedom,” said Daoud, 77, who serves as a trustee on the board of the National Automobile Dealers Charitable Foundation. “When you have an education, you have the knowledge to pursue the things in life you want to do.” Daoud, who began selling cars in the Detroit metro area in 1961, provides deserving students with scholarship grants set up by the NADA Foundation's Ambassadors program. “If a student wants to go to college, they need the financial resources to attend,” added Daoud, who earned a civil engineering degree from the Detroit Institute of Technology along with three honorary doctorate degrees. “Every little bit helps.”Source: NADAFrontPage.com

"The CFPB is on a fishing expedition." -- Damon Lester, president of the National Association of Minority Automobile Dealers, commenting on the CFPB's attempt to regulate the auto industry, The Detroit News, May 6

For more information on NADA, visit www.nada.org or contact NADA, 8400 Westpark Drive, McLean, VA 22102. This email may contain an advertisement of NADA products and services. Any opinions or statements contained herein do not necessarily reflect the views of NADA. Factual errors are the responsibility of the listed publication. If you are a franchised new-car or -truck dealer and would like to become a member of NADA, please visit the Join NADA section of www.nada.org. Questions or comments concerning NADA Headlines content may be directed to publicaffairs@nada.org .